I recently received some bad news and I am considering a strategic default if the worst case scenario happens. I am just seeking some input as to what the best course of action would be.
Background: I bought a condo in Chicago in 2010 for $255k via FHA loan. At the time there were two other units in the building that sold for the same amount, so basically paid market value. At the time there was a "possible" special assessment regarding some brickwork. Negotiated with the seller for a credit up to $2000 for said assessment. I closed on the condo and one month later the board came back and said the special assessment had been approved and my share of the assessment was $6500. Crap. So I basically paid $4500 of this assessment after the seller's credit.
Side note: I put an additional $10k after purchase to remodeling kitchen and a few other odds-n-ends (new washer and dryer, etc.)
Fast forward to today: A foreclosed unit my building recently sold for $125k. The unit next to me is under contract for $199k and is not a foreclosure. There is a rehabbed unit that is similar to mine as far as amenities and is on the market for $239k. Assuming they get full asking price this is probably the most I could get if I put my unit on the market. I owe $245k currently.
I just learned that the board has begin to discuss the time frame for redoing the building's roof which will be two to three times as much as the first special assessment. Apparently I should have done my due dilegence and hired a structural engineer to go over the entire building with a fine tooth comb. Soooo... I am looking at approx $17,500 total in special assessments in a place I have lived in for 3 years. The new special assessment can be spread out over a few years as the board will obtain a loanfor the work.
My info: Mid 30's, same stable job for 15 years, approx $75k/year income, one credit card with a $2k balance and a car loan for $12k. I just refinanced this past winter and all my credit scores were upper 700's with one or two in the low 800's (not sure which one). I just got married a few months ago, wife makes $40k. She also has excellent credit and minimal debt (a couple credit cards and a car). My name is the only name on the mortgage, which is currently held by Wells Fargo.
So, if the board passes this roof special assessment I am pretty sure I am going do a strategic default. We plan on having kids soon, within the next year, and with the additional $500 a month of the special assessment for two years plus the regular assessment of $190 all this would be too much for us to afford. Of course living in Illinois I am worried about recourse and would probably not go the short sale route as I don't want to open up our finances to Wells Fargo. My hope is Wells Fargo and the Chicago area is so inundated with foreclosures we could stay for a while and save some money. I plan on paying the assessments until the foreclosure is final to avoid having the board come after me in court.
Whew! Thoughts? And thanks for reading!